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Author's Name: Frank Jotzo
Date: Thu 16 Feb 2023

Frank Jotzo

Professor Frank Jotzo

Frank Jotzo is Professor of environmental economics and climate change economics at the ANU Crawford School of Public Policy, where he directs the Centre for Climate and Energy Policy. He is also Head of Energy with the ANU Institute for Climate, Energy and Disaster Solutions and director of the ANU Zero-Carbon Energy for Asia-Pacific grand challenge initiative. He has been a senior author with the Intergovernmental Panel on Climate Change and is joint editor-in-chief of the journal Climate Policy. He has advised national and state governments, international organisations and businesses.

Subject area expertise

Frank Jotzo’s research spans decarbonisation strategies, economics of energy transition, policy instruments for climate change and environment, political economy of policy choice and design, fiscal policy, technological change and international trade and investment. His research combines micro-economics with economy-wide modelling and cross-disciplinary perspectives on policy and technology.


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Responses (6)


Western Australian GST deal

Poll 63

April Poll - panellists were asked about the GST deal with Western Australia.  The following two questions were posed: 

"Is the long-standing arrangement broadly the best method of distributing the nationally-collected GST revenue?" and "Should the 2018 changes be kept or scrapped?"

 

YES - The principle of fiscal equalisation is an important element of the Federation. Distributing the GST in line with fiscal equalisation principles makes sense.

Scrapped

The WA deal goes against fiscal equalisation principles.


Transition to net zero - ape the US Inflation Reduction Act?

Poll 62

Panellists were asked "Which of the options set out below best describes the kind of approach the Australian government should take to the US Inflation Reduction Act? (Pick 1)"

 

.

Green industry policy needs to be carefully calibrated to realise Australia?s comparative advantage in renewable energy and clean resource processing, not to pursue visions of new manufacturing industries. And it needs to deliver financial returns back to the nation, not just prop up company profits. The US green industry policy is not a good model for Australia. Lump sum tax credits as per the Inflation Reduction Act will waste taxpayers? money. And keep in mind that the US produces largely for the domestic market, so the subsidies benefit American consumers through lower prices. Australian production subsidies will tend to benefit shareholders and consumers worldwide. Government support should take the form of selected early-stage support that gives a financial upside to taxpayers. That could be government taking equity positions in new zero-emissions industries. If it has to be subsidies, then they are best given by concessional finance or underwriting market price risk. Any subsidies should be awarded in competitive tenders, as is common now for renewable energy. In any case, future profits need to be properly taxed. Government also needs to be clear about the objectives for giving any subsidies. Providing support for emerging industries that are likely to develop a cost advantage over time is a strong case. Handing out money to existing industries that can no longer compete in international markets, like nickel mining and processing, is not. Australia can and surely will make a big contribution to global decarbonisation, by exporting clean fuels and commodities produced using renewable energy. But we need to be conscious also of the local costs inherent in large-scale industries, from local environmental impacts and effects on indigenous rights and values, to extra pressure on the supply chains that are needed to decarbonize the domestic power supply. Industry policy needs to be done in ways that benefit Australian society long term. Setting it up for solid future revenue flows to the government is the key.


Reintroduction of the Carbon Price

Poll 61

Worried economists call for a carbon price, a tax on coal exports, and ‘green tariffs’ to get Australia on the path to net zero

 

Introduce an economy-wide cap and trade carbon pricE | Expedite building new transmission lines to connect renewable energy

Achieving net zero emissions requires a far broader range of actions than the list of pre-set options here suggests as possibilities. For net zero, policy action is needed in each greenhouse emitting sector, using a range of targeted policy instruments in addition to broad-based carbon pricing where that is feasible administratively and politically. A more complete list would comprise many dozens of actions across electricity supply, electrification and energy efficiency in transport, industry and residential sector, public transport, infrastructure investment, embodied emissions in buildings and infrastructure, technology improvement and product shift in agriculture, reforestation and afforestation, and much more. A full list would also and importantly include targeted measures to support carbon dioxide uptake from the atmosphere, compensating for remaining emissions ("net" zero is what we are aiming for, not zero), as well as measures to help cut Australia's international emissions footprint as an energy exporter by encouraging the shift from coal and gas to zero-emissions fuel exports and exports of 'green' commodities. The net zero sector plans that are being developed by the government offer a chance to take stock of what emissions reduction trajectories may be possible, what actions can and should be taken by industry, households and government, and what policy interventions can best support them. It's to be hoped that this Net Zero Plan process will be extensive in its consideration of options and scenarios, and inclusive in its engagement with industry, civil society and the research sector.


We can and should keep unemployment below 4%, says our survey of top economists

Poll 60

Australia’s leading economists believe Australia can sustain an unemployment rate as low as 3.75% – much lower than the latest Reserve Bank estimate of 4.25% and the Treasury’s latest estimate of 4.5%.

 

relaxing industrial relations regulation to allow for greater "flexibility" (as defined by employers), reducing out-of-pocket costs of childcare for families

3.5


Budget 2023

Poll 59

Our panellists were asked the following 2023 budget question: "On May 9, the government delivered a budget designed, in the Treasurer's words, to strike a balance between relief, repair and restraint'.  What grade would you give the budget, given that objective: A, B, C, D, E or F?"

Wes Mountain/The Conversation, CC BY-ND - https://creativecommons.org/licenses/by-nd/4.0/

 

Overall rating: B - Keeping inflationary pressures in check: B

B

OVERALL COMMENTS: It's a sensible budget. Less timidity on social support, subsidies for energy efficiency and gas taxation would have made it better. INFLATION COMMENTS: It is not an expansionary budget, any effects on inflation will be small in context. Some of the budget measures provide some help to those who bear the brunt of inflation.


How economists would raise $20 billion per year

Poll 58

When panellests were asked to find an extra A$20 billion per year to fund government priorities like building nuclear submarines and responding to climate change, Australia’s top economists overwhelmingly back land tax, increased resource taxes, an attack on negative gearing and extending the scope of the goods and services tax.

Photo credit by Joshua Hoehne on Unsplash

 

Efficiency picks: Tax windfall profits Introduce or increase land taxes (possibly with cut in stamp duty) Wind back deductions for negatively geared properties Equity picks: Wind back deductions for negatively geared properties Tax windfall profits Wind back superannuation tax concessions

Efficiency comments: There are many ways to raise more tax revenue efficiently, especially by cutting tax concessions; resource taxation also has big gaps. Not on the list here is an important unused option: carbon pricing that raises revenue. If Australia fully taxed emissions at $100/tCO2-equivalent then the revenue would be around $15 billion per year from electricity, $18b per year from industry and stationary industry, and $9 billion per year from transport. Reference points: EU emissions trading now nearly $150/t with auctioning revenue greater than 30b euros per year; Australia's planned maximum price in the safeguard mechanism is $75 per tonne, but there is no plan to create any fiscal revenue. Equity comments: Many of Australia's tax concessions predominantly benefit high income earners and/or relatively wealthy people. In the interest of equity and also efficiency they should be reduced or eliminated.